Health Insurance Rates - What's Up?

Blog by Rob Cannon, Executive Vice President, Gorges & Company, Inc. 


You have probably heard the news that health care premiums are increasing significantly in Maryland. Generally, premiums for group insurance in Maryland that apply to most nonprofit employers are going up, but the average increase is not in the double-digits like it is in the individual market.
Some of the primary reasons for increasing health care costs include:

• Health care benefits have increased over 72% since 2000
• Population is aging
• Rise in obesity and chronic illnesses due to poor eating choices and under-exercising
• Introduction of new treatments
• More diagnostic testing
• Defensive medicine
• Higher premium tax costs of regulatory medicine
• Ads for drugs that make us feel better but aren’t a necessity

What’s Happening in the Individual Market
In the individual market, evidence suggests that more and more healthy (and therefore less costly to insure) individuals forgo insurance coverage, leaving an insured pool increasingly comprised of older and sicker subscribers who are disproportionately more costly to insure. There is a law requiring people to have health insurance but the penalties are not high enough to motivate many healthy people to buy insurance. Some reports are saying individual insurance rates are going up by 20% or more for 2016 and 2017.
Prior to the ACA, people enrolling in the individual market were medically underwritten so the healthiest people were approved and the others denied. As a result, the rate in the individual market may have been $250 and the group rate almost $400 for the same person. Under the ACA, nobody is subject to medical underwriting which means that unhealthier people could pay less in the individual market. That segment is where the large increases are occurring because the lower rates are no longer supported by the enrollment. By next year, the disparity will be almost entirely gone.

What’s Happening with Employer-Based Plans?
Group insurance rates that are employer-based are experiencing single-digit increases in line with prior years, not the huge jumps that are reported in the individual market. Since 1994, employers in Maryland with fewer than 50 employees have been subject to Small Group Health Reform. This law accomplished many of the goals of the Affordable Care Act (ACA) such as not being subject to medical underwriting. No individual in an eligible group plan could be denied or charged a higher premium than a healthy person. Age of individuals in the group can be considered. Group rates in the small group market (under 50 employees) generally have had single-digit increases for the last couple years and that is what is projected for 2017 rates.
Organizations with more than 50 employees are subject to medical underwriting in setting health insurance rates. This is why Maryland Nonprofits is now offering its members the Vital Health program that may provide lower premiums for larger organizations.
Gorges and Company has been a trusted partner with Maryland Nonprofits for over a decade. We provide free quotes on health insurance for organizations of any size and will apply all discounts available to you as a Maryland Nonprofits member. Feel free to contact me anytime at 410-561-8280 or robc@gorgesco.com
Rob Cannon

Executive Vice President
Gorges & Company, Inc.
2345 York Road
Timonium, MD 21093

Phone: (410) 561-8280
Fax: (410) 561-9728
Email: robc@gorgesco.com
Website: www.gorgesco.com

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New ACA 2015 Tax Forms

New Forms for Your 2015 Federal Income Tax Filing
When the Affordable Care Act (also known as healthcare reform, or the ACA for short) was passed, it came with a host of reporting requirements for employers and health insurance companies. In late March you may receive one or more new tax forms related to health insurance you may have had or were offered in 2015. Originally, these forms were to have been sent in January, but the IRS extended the release date to March 31. When the IRS extended the release date, it also removed the requirement for you to attach these forms to your 2015 tax filing.

Please keep in mind that while we know what form or forms we will be sending, you may receive others if you worked for another employer earlier in the year or are enrolled in our Kaiser IHM plan. Therefore, we will explain the form (or forms) you might receive, why you might receive them, and what you will do with the information they contain.

Form 1095-B

Why will I receive it?

If you receive this form, it is because you were:

• An employee who received health coverage from an employer-provided, fully-insured plan, a union-based plan, or certain other plans (including Medicare or Medicaid) for at least a day in 2015. For State of Maryland participants the only fully insured plan is the Kaiser IHM plan offered under 

Or

• A nonemployee (for example, a retiree, contractor, or COBRA recipient) who received health coverage under a type of employer-provided plan called a "self-insured plan" (these are plans under which claims are paid from employer funds and, typically, employee contributions) for at least a day in 2015. For State of Maryland participants these plans include all CareFirst and United Healthcare plans offered under the Program, including SLEOLA plans.

How will I use this information? You or your tax preparer will enter information contained on this form on your federal tax return for 2015 to demonstrate that you satisfied the ACA’s obligation to have health insurance. It is not necessary, this year, to wait until you receive either of these forms to file your income taxes. For your 2016 tax filing in 2017, you may be asked to wait until you receive the form(s) before filing your taxes.

Form 1095-C
If you receive this form, it is because you:

• Were considered "full time" for ACA purposes for at least part of 2015. Or
• Were covered for at least a day in 2015 under an employer-provided self-insured plan.

Form 1095-C, Parts I and II
If you were considered full-time for ACA purposes for at least part of 2015, these two parts of Form 1095-C will be completed on your behalf, regardless of the type of health plan under which you were covered, or regardless of whether you had or were offered any coverage at all. Full-time for the purposes of ACA means you worked 30 or more hours per week or worked an average of 130 hours per month. Contractual, temporary, variable hour, and adjunct faculty are examples of employee types who may have been considered full-time, in addition to those whose normal work week is 40 hours.

Form 1095-C, Part III
If your health insurance was through an employer-provided, self-insured plan, Part III will be completed on your behalf. (If you are enrolled in the Kaiser IHM plan this part will be left blank, and you will receive a 1095-B from Kaiser.)
How will I use this information? For filing your 2015 taxes, you will keep this information with your other tax records. When you file your 2016 taxes, you may be asked to include the forms you receive in early 2017.

Further questions? Please contact the Employee Benefits Division at either EBD.mail@maryland.gov or 410.767.4775. The IRS will receive copies of any Forms 1095-B or 1095-C provided to you so it can verify the health insurance information you report on your tax return.